Ukraine gas: EU Energy Commissioner says Russia will charge $350-$380

Russian gas exporter Gazprom and Ukraine’s Naftogaz will try to settle on a price between $350-$380 per 1,000 cubic meters through till next June, said EU Energy Commissioner Gunther Oettinger, who brokered talks Monday.

“Real progress has been made,” Oettinger said in a
statement. The Commissioner didn’t disclose the final price, but
said it fell within the range Kiev currently pays ($485) and what
it used to pay on discount ($268.50), ITAR-ITASS reported.

“My request and my expectation is that we come up with a
package that covers the period until June next year,"
Oettinger said.

Oettinger said the CEOs of Gazprom and Naftogaz need some more
time to consider all the legal, financial, and economic details
of the proposal, and also need to consult with their respective
governments.

“The two CEOs worked out a proposal, which is now to be
checked by their governments and also their specialists and then
they'll come back to us,” Oettinger told reporters.

Stockholm can wait

Another development in the gas price standoff is that neither
party will pursue a court solution in the meantime, according to
the Commissioner. Both companies had hinted at taking the price
dispute to the Stockholm-based arbitration court.

“Both sides agreed that neither one nor the other will go to
the Stockholm court,” Gazprom CEO Aleksey Miller told RIA
Novosti, adding that the parties plan to resolve the gas price
dispute before the next round of talks begin sometime before June
9.

“If the parties settle all the issues in the negotiations, it
may not be necessary to go to the Stockholm court," he said.

As a result of Kiev's substantial gas debt to Russia, the price
charged to Ukraine surged from $268.50 to $485.50 per 1,000 cubic
meters in April, when Russia cancelled two discounts. Kiev has
kept refusing to pay the full price, saying it is ready to repay
its debt if Moscow fixes its price at the lower rate. European
clients, on average pay $380 for Russian gas.

Speaking about a possible new discount for Ukraine, Miller hinted
that the price may be reduced in direct commercial negotiations
between Gazprom and Ukrainian Naftogaz.

Ukraine receives about half of its natural gas from the Russian
company, and about 16 percent of Europe’s annual demand passes
through Ukrainian pipelines, according to the US Energy
Information Administration.

The progress in negotiations comes after Naftogaz last week
paid Gazprom $786 million of its $3.5 billion
debt following the latest round of talks in Berlin. A compromise
agreement reached in May was broken by Kiev after it failed to
repay $2 billion to Gazprom. The second part of that deal
included another $500 million to be paid no later than June 7.

On Monday, Aleksey Miller said that Gazprom will wait another seven days for the debt to be paid in
full before it switches Kiev to a prepayment system for natural
gas.